Carnaby Resources Limited's (ASX:CNB) Shift From Loss To Profit

We feel now is a pretty good time to analyse Carnaby Resources Limited's (ASX:CNB) business as it appears the company may be on the cusp of a considerable accomplishment. Carnaby Resources Limited, together with its subsidiaries, engages in the exploration and development of mineral properties in Australia. The AU$64m market-cap company posted a loss in its most recent financial year of AU$12m and a latest trailing-twelve-month loss of AU$8.3m shrinking the gap between loss and breakeven. As path to profitability is the topic on Carnaby Resources' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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According to the 2 industry analysts covering Carnaby Resources, the consensus is that breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of AU$23m in 2027. So, the company is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 79% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Carnaby Resources' growth isn’t the focus of this broad overview, however, bear in mind that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

See our latest analysis for Carnaby Resources

Before we wrap up, there’s one aspect worth mentioning. Carnaby Resources currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Carnaby Resources, so if you are interested in understanding the company at a deeper level, take a look at Carnaby Resources' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is Carnaby Resources worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Carnaby Resources is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Carnaby Resources’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.